TSMC process in trouble, says analyst

LONDON Ė Mike Bryant, technology analyst with Future Horizons Ltd. has said that foundry Taiwan Semiconductor Manufacturing Co. Ltd. is in trouble with its 28-nm manufacturing process technologies, which are not yet yielding well. Bryant referenced un-named contacts made with multiple companies waiting for designs to be produced by TSMC on 28-nm processes.

Bryant said that there are 10 designs in manufacture from seven companies. "We're now hearing none of them work; no yield anyway," he told an audience at a one-day market forecast conference organized by Future Horizons, here on Thursday (Jan. 19). "Ten designs going through; we have heard about problems on six of them," Bryant added. Bryant's comments echo those made by Bob Johnson, research vice president at market research firm Gartner in November 2011.

However, Bryant's description of the situation at TSMC is quite different to that of the company's CEO and chairman Morris Chang. Speaking to analysts about TSMC's fourth quarter financial results on the previous day, Chang said: "Our 28-nm entered volume production last year and contributed 2 percent of 4Q11's wafer revenue. Defect density and new progress is ahead of schedule and is better than 40-45-nm at the corresponding stage of the ramp-up. We expect 28-nm ramp this year to be fast and we expect 28-nm will contribute more than 10 percent of total wafer revenue this year."

Nonetheless Bryant of Future Horizons asserted that Intel has a clear technology leadership position as it has been running 32-nm manufacturing process for some time and that pressure to keep up with Intel had caused some miss-steps by TSMC, while Samsung Electronics Co. Ltd., with experience gleaned running 20-nm class memories, had successfully brought up its 28-nm low power logic process.

In contrast, TMSC is in a similar situation to Globalfoundries Inc. which saw problems with its 32-nm/28-nm processes in 2011 that appeared to drive its primary customer, Advanced Micro Devices Inc., towards TSMC as a source of integrated circuits. Bryant acknowledged that the TSMC 28-nm process is now in true volume production and the Qualcomm Snapdragon S4 has won the highest proportion of available design slots. "However, there are recent comments of major yield problems with their 28-nm process actually being even worse than at GF [Globalfoundries]," Bryant told the audience.

Intel's lead in process technology has put foundries under pressure, Bryant said. The 18-month to two-year time scales needed to develop processes, and design complex ICs mean that both are being begun before the other is completed and stable. While that process can be managed in-house by an IDM such as Intel, foundries are finding it more difficult as they have to work with customers on chips and physical design kits at the same time.

Regardless of the truth of the details, 28nm has been a real challenge, particularly in the initial ramp up phase. This is more sanely evidenced in the increasing amount of DFM activities being pushed to the designer at these nodes. Things like litho checking, smart fill, pattern based checks, and restricted design rule checks have migrated from recommended to required. This is evidence enough that many of the second and third order effects on yield are becoming first order. Strict adherence and effort spent optimizing these DFM issues in the design phase is probably what is causing such different results on different chips. All designs are not the same from a DFM perspective.

It sounds like there is no clear story here, one says no yield and another says on target for defect density. It could mean the 0% yield is on track with what they expect for defects at this point. I am sure that they are closing guarding the real numbers. Only time will tell, I am rooting for success as it can only help drive costs down overall in the market.

Samsung stays ahead of TSMC in this regard because they always start a new node with memory before going to processors. For memory Samsung is already at 20 nm. Samsung's A6 for Apple is already at 28 nm ( only in Austin, NOT So. Korea )
In the last few years TSMC has come through as being a little too cocky about their market share and at Technical Conferences sounded almost "Big Brother" ish.
Samsung's spending of 10s of billion $ in 2012 does not bode well for TSMC lead in Foundry. In fact TSMC is already out in the public back pedalling on their CapEx siting low growth in demand.
What happens now if nVidia or even Qualcomm ( current large customers of TSMC ) now jump ship ( Samsung, even Intel ?? ) in order to stay competitive with A6 Quad Core ?

Since most of the large fabless companies are satisfied with TSMC 28nm process, the low yield issues of some companies are potentially due to design related process issues. It can be fixed by design/process expert after review the layout.

I think we may potentially see many fabless semiconductor companies talk about moving to UMC and/or Samsung for 22nm if TSMC has a setback at 28nm. But much of this will be idle talk to try and get TSMC to lower prices since nobody else has enough production capacity at this point. Most 28nm designs simply are not ready for production level tapeout since the process and IP are immature for 2011 and 2012. I suspect much blame also resides within TSMC's customers for the failure since just about everyone does test chips on new processes for characterization before launching production designs.

No mention of UMC 28nm in this article, but EE Times article from last year indicated TI using UMC as their lead foundry for 28nm. I assume other chip companies have similar multi-source foundry strategies.
http://www.eetimes.com/electronics-news/4214774/Upset-TI-slams-Samsung-s-foundry-efforts
It will be interesting to see which foundry can work out thier 28nm yield issues first and how this translates to application processor and GPU market share in 2013.
Andy

"While problematic, TSMC have enough of a capital cushion to withstand such losses."
That is the problem. The big three have enough capital cushion for anything. They have no need for innovation except for their own. You have to turn to FTC to get anything, like in the Univ. of New Mexico vs. TSMC case. It is killing the ecosystem.